Asia Distillates-Diesel cash markets hit 3-month high

Asia’s diesel markets saw a bullish rout towards late week for prompt October paper and physical discussions, following worries of tighter supply-demand balances regionally and possibly lower China-origin exports.

The 10ppm sulphur gasoil paper markets turned into backwardated structures as concerns on tightening supplies overtook earlier demand worries, with October outlooks mostly positive for now.

A slew of buying interest in the week sparked talks of more-than-expected unplanned outages regionally, further supporting prices.

Lesser-than-expected China-origin diesel barrels loading next month proved to be a bullish driver towards late week, though some traders were cautious on jet fuel given that oil majors could place their focus more on the latter given stronger export margins.

Jet fuel activity was slightly muted, as evidenced by the thinner paper discussions and unchanged market shape, though one physical deal did emerge early week.

However, several refiners did sell more October spot cargoes, with China refiners at the forefront given the availability of export quotas since last week. At least three cargoes were on offer this week.

Refining margins GO10SGCKMc1 for 10ppm sulphur gasoil closed the trading session at a three-week of high of around $13.30 a barrel.

Cash differentials GO10-SIN-DIF gained to a three month high as buying interest picked up, with Unipec bidding for most October loading dates. Deals, however, were unseen for the fourth straight trading session.

Meanwhile, regrade JETREG10SGMc1 fell further and closed at more than a one-month low, given the strength in gasoil markets.

SINGAPORE CASH DEALS O/AS

– No deals for both fuels

INVENTORIES

– Independently held refined oil products stocks in storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub were little changed over the week to Thursday, data from Dutch consultancy Insights Global showed.

REFINERY NEWS

– Citgo Petroleum shut down its 177,000 barrel-per-day (bpd) refinery at Lemont, Illinois, on Wednesday afternoon due to a power blip by its electricity supplier, the company confirmed on Thursday.

– South Korea’s S-Oil has shut No. 1 crude distillation unit (CDU) and some refining units at its Onsan refinery for a scheduled overhaul this week, sources familiar with the matter said on Friday.

NEWS

– China’s industrial profits swung back to a sharp contraction in August for their biggest decline this year, official data showed on Friday, adding to a recent spate of bleak business readings that point to mounting pressure on the economy.

– About 25% of crude oil production and 20% of natural gas output in the U.S. Gulf of Mexico was shut in as a result of Hurricane Helene, the Bureau of Safety and Environmental Enforcement said on Thursday.

– Oil prices recouped losses on Friday to edge higher, but stayed on track for a weekly fall as investors weighed expectations for increased output from Libya and the broader OPEC+ group against fresh stimulus from top importer China.
Source: Reuters (Reporting by Trixie Yap; Editing by Tasim Zahid)